UK Lawmakers Launch Inquiry Into Banking Barriers Facing Crypto Businesses

The UK's cryptocurrency sector is once again under the spotlight as lawmakers begin a parliamentary investigation into the banking challenges facing digital asset companies. The inquiry aims to determine whether banks are creating unnecessary obstacles that could threaten the country's plans to become a leading global hub for crypto innovation.

The review is being led by the Crypto and Digital Assets All-Party Parliamentary Group (APPG), a cross-party body co-chaared by former digital economy minister Lord Vaizey of Didcot and Labour MP Gurinder Singh Josan. The announcement comes shortly after the UK finalized its long-awaited regulatory framework for cryptocurrencies, raising fresh questions about whether banking practices are keeping pace with government policy.

According to the APPG, many cryptocurrency firms have struggled for years to secure or maintain bank accounts. At the same time, several major UK banks—including HSBC, NatWest, Santander, Nationwide, and Starling Bank—have introduced restrictions on payments linked to cryptocurrency platforms, making it more difficult for businesses and consumers to move funds.

The inquiry will investigate whether these measures are justified, focusing on access to banking services, payment limitations, insurance availability, and account closures. Lawmakers will also examine how these restrictions affect competition, investment, consumer choice, and innovation across the UK's growing digital asset sector.

In a joint statement, Josan and Vaizey emphasized that reliable banking services are essential for legitimate businesses operating in any industry. They warned that unnecessary financial barriers could discourage investment, limit business expansion, and weaken the UK's competitiveness as countries around the world continue developing their own crypto industries.

The timing of the inquiry is significant, with the UK's new crypto regulations expected to reshape the market over the coming years. Lawmakers want to ensure that regulatory progress is not undermined by banking policies that make it difficult for licensed crypto companies to operate.

Industry data has already highlighted the scale of the issue. Research released earlier this year by the UK Cryptoasset Business Council estimated that roughly 40% of attempted transfers from customers to crypto exchanges were either blocked or delayed by banks. Around 70% of surveyed exchanges also reported that banking restrictions had negatively affected hiring, investment plans, or business growth within the UK.

These concerns are not new. A previous APPG investigation in 2023 reached similar conclusions, warning that continued friction between banks and crypto companies could damage the UK's ambitions to establish itself as a major digital asset center.

Government officials have acknowledged the problem as the regulatory framework has taken shape. Earlier this year, Economic Secretary to the Treasury Lucy Rigby told Parliament that firms authorized by the Financial Conduct Authority should not face banking restrictions solely because they operate within the cryptocurrency sector. Her comments signaled that the government expects regulated businesses to receive fair access to financial services.

The parliamentary group also plans to study how other major jurisdictions have approached crypto banking. The review will compare policies in the United States, the European Union, Hong Kong, and Australia, where similar disputes between financial institutions and digital asset companies have emerged.

In the United States, several crypto businesses have argued that banks distanced themselves from the industry during what critics described as "Operation Chokepoint 2.0," a period of increased regulatory pressure. Meanwhile, in Australia, Coinbase has publicly accused banks of unfairly restricting crypto-related transactions.

The APPG hopes that examining these international experiences will help shape recommendations for the UK's own banking and crypto policies.

As part of the investigation, lawmakers are inviting written submissions from businesses, financial institutions, industry groups, and consumers. The consultation will remain open until August 31, after which the APPG will prepare a report outlining recommendations for the government.

The findings could play an important role in determining whether banking practices evolve alongside the UK's new crypto regulations, helping ensure that licensed digital asset businesses can compete on equal footing while maintaining appropriate safeguards for consumers and the financial system.